Make earning—and spending—fun again!

Remember the thrill when you learned a dollar could buy something wonderful? Reconnect to the joy of spending—and recharge your joy in earning

By Manisha Thakor

Photograph: Matthew Hollister

After graduating from Harvard Business School, I embarked on a 15-year career in high finance. Over time, I invested billions of dollars on behalf of giant multinational corporations, large foundations and extremely wealthy families. Earning money—for my employers, my clients and myself—was the point of everything I did.

Unfortunately, at some point during my corporate years, my identity became painfully wound up in “my number,” that year-end income figure by which I eventually defined how worthy I felt as a person. In my early post-MBA days, I was happy with a number in the six figures. As my career started to soar, the self-acceptance baseline became seven figures. I was on an ego-driven treadmill and couldn’t find the stop button. It was exhausting. I felt mentally conflicted and emotionally empty.

On the one hand, I loved making lots of money. It gave me freedom, choices, opportunities and trips to luxury spas. But the number of 80-hour weeks I was putting in meant I didn’t have time for the small daily acts—like lingering in the sun at lunch—that made me feel connected and real. My job hurt my relationships with my husband, family and friends. I became a human doing, not a human being.

For that reason, I quit my corporate career three years ago and started my own business, which focuses on financially empowering women. Going it alone has not been easy, but my goal remains steadfast: to earn a healthy living while providing a service I believe in, and still have time for fun. As part of my new job, I often talk to women about money. I’m not alone in struggling with how to earn enough while still feeling true to myself. Many women tell me they feel as though they are on an earning-spending roller coaster—as fast as money comes in, it blows right out again—and they feel frustrated, as if they have failed. I totally get it: If you need all your money to maintain your lifestyle, how do you save for retirement or beef up your emergency fund?

I left my high-paying job by choice, which in itself is a luxury. Many of us are trying to rightsize our living standards in response to new economic realities, which brings its own enormous challenges. But even before the downturn, millions of us were living beyond our budgets. Before 2008 the bottom 80 percent of Americans were reportedly spending 110 percent of their income. Yet today the income of the average American household is lower than it was in 1997. We are in desperate need of a nationwide financial reset.

As I have worked to resolve for myself the question of how I want to earn and spend money, it has become clear to me that the debate about work-life balance has a close sibling that I call the money-joy sweet spot. If we work to earn money and we live to experience joy, then we need to make sure we use our money in a way that makes us happy. And earning more isn’t necessarily the answer; I have learned the hard way that the anxiety that comes from being out of harmony with money is painful at any income level.

So how can you change the way you think about money to find that highly personal money-joy sweet spot? Here is a three-point plan:

1. Figure out what you are making per hour
First, count how many hours you work each week. Don’t forget to include off-the-clock hours you spend on digital devices for work-related projects (a time-tracker such as Toggl.com can help). Next, take your annual after-tax income (because you can spend only what’s left after taxes) and divide it by your hours. If you work 40 hours a week, 50 weeks a year, that’s 2,000 hours. If your after-tax income is $100,000, that means you are bringing in $50 an hour.

Once you have your number, you can use it to help you evaluate your purchases. Is that $500 coat really worth 10 hours slogging it out at the office? Maybe yes, maybe no. The beauty of this figure is that it gives you a personalized benchmark for assessing your spending choices. By thinking at the point of purchase about how long you had to work to earn that money, you can decide for yourself if you’re making a good trade-off.

2. Do a joy audit on your life
In the past five years, what has brought you the most joy? Write down anything that comes to mind. Next, commit to keeping track of all the money you spend for one month (a site like HelloWallet.com can help). At the end of the month, print out your list and use a highlighter to mark each item that brought you joy.

Now take a hard look at the two lists. How much of the money you spend goes to things that make you happy? Some expenses you will not be able to avoid; others will be eye openers. As I looked back over my prior month’s purchases, I saw that I got a lot of pleasure from the $118 that I spent in cafés. In contrast, I realized I got almost nothing out of the $25 I spent on a pedicure—I hate having my feet touched.

3. Create your money-joy return-on-investment list
The next step is to identify two or three ways you can shift your spending to bring it more in line with the things that make you happy. One of the activities I love most is learning to tango. The $75 my husband and I pay for each lesson supports our physical and emotional health—it’s like therapy for the brain as well as the body. Adding more sessions gives me a strong “money-joy” return on investment. But pedicures? I have a negative ROI for those. I should polish my own toes!

When you do this analysis, consider all facets of your life. For example, are the maintenance bills you pay on your home supporting your joy or merely servicing a style of living that is more habit than pleasure? Do your country club and alumni organization really make you happy, or are they expenses that crept in? The right answers to these questions are your answers. But the benefit of this kind of thinking is that it puts you in a position to make decisions that support your dreams. And that’s enough to make anyone happy.

Manisha Thakor writes and speaks about personal finance for women. Her website is MoneyZen.com.